Real Estate Investment is one of the ways by which you can gain both short-term and long-term financial benefits. Real Estate investment is a great way to earn passive income, and the benefits of investing in real estate are enormous. It is one of the ways to get rich really quickly. Huge fortunes in not only the USA but in the whole world have been made in real estate. Every investor is aware of the massive returns that we can get from real estate investment, but what confuses every beginner is how to get into real estate investment, where to get started, and the best strategies for beginners to start with real estate investment. If such questions pop up in your mind, too, it’s absolutely fine, and everyone who is about to begin his real estate investment journey has a lot of such questions in his mind.
In this blog, we have got everything covered. You will find the most popular real estate investment strategies for a beginner. There are various strategies of real estate investments suitable for different sorts of people. There are pros and cons in every strategy, and every strategy entails different kinds of risks and rewards. In the end, what matters is what sort of risk you are going to take.
There are various strategies that a beginner can follow, but let us tell you that just like one size does not fit all, not every strategy six for everyone. You must go for the strategy that suits you the best.
1. Buy and Hold:
One of the ways real estate investors make money is through the appreciation of property value. Property prices have seen tremendous appreciation in the past few years, and prices are always on the rise. So the first strategy is to buy a property and hold it for a month or year, longer the better; and after some time, sell it at a higher price after its price gets appreciated.
Timing matters a lot in real estate, and something that you will see common in all successful real estate entrepreneurs is that they bought the investment properties at the right time at the right place and later on sold them at the right time.
In real estate, there is a time to buy and a time to sell. You can even earn money from your property even you are holding it. All you need to get Property Management Service in Jacksonville Fl to rent out your property. As long as you don’t find a buyer for your property, you enjoy monthly rent of your property.
Don’t wait to buy real estate; buy real estate and wait.
– T. Harv Eker
Advantages:
There are many advantages to buying and holding property as the price of property gets appreciated every year, and after some months or maybe years, we can sell the property at a higher price. It’s a pretty simple strategy with the minimum hassle involved. All you have to do is find a suitable property, buy it, and wait for the right time to make profits.
Disadvantages:
First of all, you need a huge investment to buy a property. This strategy is only for those who have a massive amount of saving to invest. This is a capital-intensive strategy, and you will need an enormous amount of money for it.
Appreciation of a property’s price depends on several factors. In case of financial crunch, market crashes, property prices follow a downward trajectory, and the price of a property doesn’t get appreciated due to less demand; instead, it gets devalued, and the prices of property plunge.
2. Buy to Rent:
Like every industry, there are ups and downs in real estate as well. Generally, when the overall economy is doing well, real estate performs well. It flourishes too, and when the economy is tight, real estate comes to a standstill for as the real estate strategies are concerned, it’s not like one size fits all. Some strategies work in some states and may not work in other states.
We are terrible at predicting the future.
When the market goes down, more people rent, people always need someplace to live permanently, no matter if a good or bad economy is going.
Housing is a basic need of every citizen. Whether times are good or bad, the economy is doing well or collapsing; there will be a need for housing. Another exciting factor is that in case of any crisis, more people than ever tend to rent due to unaffordable mortgage rates and costs involved in owning a rental property. If you are a beginner and about to make your first investment in real estate, then the safest option you can go for is buying a rental property and renting it out to create a passive income source. This is the most common investment option out there and safest as well.
The question that is likely to pop into the mind of most of us is whether to go for a commercial rental property or a residential one; then, the safest bet is to go from the residential investment property. Residential rental will always work; all we have to do is be strategic about that.
Buy a Rental; it will be rock in Real-Time and Bad.
With a slowdown in the economy, business activities may subside and come to a standstill, but demand for rental houses will not decline.
If we got some money, rentals are excellent.
Besides being a risky investment, commercial real estate is far more expensive than residential real estate with more risk involvement; returns are high too.
In the states with a high renter population, Single-family rental homes are always high in demand.
So to become a real estate investor, you can get started buying a single-family home or studio apartment and renting it out. You can also hire any property management company in Jacksonville Fl to oversee the day to day affairs of your property and manage your tenants.
Keep in mind:
Before buying a rental investment property, do consider the rental population and average rent in that area. An unoccupied rental property is a burden instead of a source of passive income; so buy property in those neighborhoods where the renter population is high and vacancy rates are low so that you can start making money from your rental property front every day you buy it.
3. Flip the Property:
Well, by flipping property, we mean buying the property and selling it very quickly, for-profit and moving on to buy the next property, and the cycle continues. Unlike Buy and Hold, in this strategy, investors hold the property for a brief period that mainly extends from a few weeks to at most 3-4 months. But the issue with this strategy is that it can be applied in specific neighborhoods and cities where housing units are high in demand, and investors are pretty hopeful that they will find a buyer soon.
Suppose you are living in such a neighborhood where housing units are high in demand. In that case, you can use this strategy. So to get started, all you need is to make sure you are aware of every property available for sale in your area, so buy it and sell it the moment you get the better offer. You will get some great offers given that the area you have purchased the property in is where housing units are high in demand.
Pro Tip:
We often hear that we don’t go with the flow, but it’s okay to go with the flow in real estate. Analyze the local market and see which properties are high in demand. Those in high need are easy to flip and available to buy quickly. An analysis of market trends before purchasing a property to flip is essential, and your choice of property will play a crucial role in how much profit you will make.
You’ve got to go where the bucks are going.
4. Wholesaling:
Many of us might think that if they don’t have much money, they can’t invest in real estate, but there is something for everyone in real estate. If you don’t have any massive investment to dive into in real estate investment, you need not worry. Wholesaling is for you.
All you’ve got to do is secure a property and a potential buyer for that property act, sell that property at a price higher than what the owner is demanding to a buyer and get your chunk.
This may sound simple, but it’s not as straightforward as many of us imagine it to be. One has to build a robust list of potential buyers and reach out to them to sell the property.
Having done everything right, one can make huge profits in a short period with wholesaling.
This strategy has worked well for real estate investors. Some successful investors have done this. One of the most straightforward ways of getting started with real estate investment is wholesaling.
5. Rehabilitate and Resell:
Wear and tear in any property with time happens. Every property needs to undergo maintenance on a yearly and quarterly basis to keep it in the best shape. But some rental house owners don’t bother with maintenance work on their property and put their properties on sale “AS IS.” Such properties are available at lower than market price. All we have to do is buy such properties on as is basis and do some renovation work on these, and after renovating them, we can put them for sale at a higher price. This is one of the most popular investment strategies, and many successful real estates have made huge fortunes using this strategy.
Things to Keep in Mind:
You will have to spend some time looking for some undervalued property because if you are going to buy a property at a higher price in the first place and invest money in rehabilitation, then your profit margin is bound to decline. So try to buy an undervalued property, and you buy it at a great price so that after spending some money on its rehabilitation, you can earn a good amount of profit.
Conclusion
There are multiple strategies that you can get started with. The most crucial factor that will help you choose which strategy suits you the best is your investment. If you have some decent amount of investment, you can go for buy to rent & buy and hold, etc., while if you don’t have a considerable investment, you can go for wholesale. Different strategies will suit different sets of people, so you will have to decide which one works best.
